In October, the savings Bank received a profit of 33,9 billion rubles. The Bank has managed to accelerate the decline rates of net profit, which in January-October decreased by 1.6 times.
MOSCOW, 9 Nov. Sberbank in October has received a record high net profit in the amount of 33.9 billion rubles, which was the highest result since September last year. This allowed the largest Russian banks to accelerate the decline rates of net profit, which in January-October decreased according to Russian accounting standards in 1,6 times — to 178,3 billion rubles 293,9 billion rubles for the same period last year.
For comparison, in January-September of the current year Sberbank’s net profit under RAS decreased by almost 2 times, in January-August — in 2.3 times. “We expect faster recovery in net interest income under the influence of improving the structure of working assets and Disposals of seasonal deposits at the beginning of 2015”, — said the Deputy Chairman of the management Board, financial Director of the savings Bank Alexander Morozov, whose words are in the press release.
Sberbank greatly helped by the reduction of the key rate of the Central Bank, which from January to October was down five times — from 17% to 11% per annum. The decrease rate of the Central Bank has allowed Sberbank to reduce the cost of funding and yielded positive results, stated the representative of the Bank.
The head of Sberbank German Gref in early October suggested that Sberbank’s net profit following the results of 2015 will be reduced by approximately 30% due to the trend of recovering growth of the Bank’s business.
“The Bank’s profitability continues to recover. You see a decent enough return on equity, growing the profitability of the assets she grew up between September and October from 1.8% to 1.9%,” commented the representative of Sberbank reporters on a teleconference.
The return on equity of the savings Bank on 1 November 2015 was 10.1%, compared with 17.6% for the same period last year, return on assets fell to 1% from 2%, reported the Bank.
“We have reduced the cost of risk overall against the first half of this year, and this suggests that certain trends to reduce the load of the reserves in the second half more clearly crystallize out”, — said the representative of the largest Russian Bank.
Reserves and delay
Expenses on creation of reserves of the savings Bank in January-October of 2015 increased 7.1% to to 333.6 billion roubles against 311,4 billion rubles for the first ten months of 2014. The largest Russian Bank in October lowered the costs of reserves to 29.9 billion rubles, as against monthly average at 33.7 billion rubles for the previous nine months.
Created by the savings Bank reserves exceed outstanding debt by 1.9 times, notes the Bank. Overdue debt on loans to companies increased during the ten months from 2.6% to 3.2%. The level of NPLs in the retail portfolio have not changed significantly, having increased within a tenth of a percentage point, said the representative of the savings Bank.
The share of overdue loans in credit portfolio for October increased by 0.4 percentage points to 3.3%. This happened mainly due to the transition in discharge of arrears of the loan to a large borrower, reserves for which were previously created, said the savings Bank, noting that the level of arrears is significantly lower than in average on the banking system.
The assets of the savings Bank in October decreased by 1.7%, for ten months by 1.1% — up to 21.6 billion rubles. A significant impact on the balance sheet reduction in October has had a revaluation of foreign currency component in the result of the depreciation of major currencies against the ruble. The main decrease was in cash, nostro accounts and loans to corporate customers, said the Bank.
Funds of natural persons in Sberbank in October rose 0.3 percent, or 30 billion rubles and reached 9.8 trillion rubles; funds of legal entities, on the contrary, decreased by 1.6% to 5.9 trillion rubles. Funds of natural persons in October increased mainly due to the savings certificates, the Bank said.
“The turnover within the month is great, bring a lot, including some part of the shoot and pay with card… end of month recorded on certificates growth, it accounts for more than 90% throughout the growth (of individuals — ed.)”, — said the representative of Sberbank.
Since the beginning of the current year funds of natural persons increased by 1,281 trillion rubles, or 15.1%, whereas for the same period last year growth of the portfolio amounted to 1.7%.
Funds of legal entities, on the contrary, after a significant growth over the past four months to October fell by 97 billion rubles or by 1.6% due to the outflow of ruble funds from deposits and current accounts, said the Bank. The balance of funds of legal entities since the beginning of the year increased by 869 billion rubles, or 17.2%.
Retail loan portfolio of Sberbank in October rose 0.2 percent, or 10 billion roubles to 4.1 trillion rubles in October to individuals issued more than 105 billion rubles since the beginning of the year, about 960 billion rubles. The share of housing loans in the portfolio continued to grow and by 1 November was 52.4%.
However, in October the Sberbank has granted to corporate clients loans worth more than 0.7 trillion roubles for the ten months of 2015 — about 5 trillion rubles. The balance of the credit portfolio for October decreased by 174 billion rubles, or 1.5 percent, to $ 11.6 trillion rubles.
The corporate loan portfolio of Sberbank in January-October of 2015 decreased by 1%, but for the year the results can be better, said the representative of the Bank. Loans to individuals during the reporting period increased by 0.9%.
The assets of the savings Bank in October decreased by 1.7%, to 21.6 billion rubles. A significant impact on the balance sheet reduction in October has had a revaluation of foreign currency component in the result of the depreciation of major currencies against the ruble. The main decrease was in cash, nostro accounts and loans to corporate customers, the Bank explains. Assets, risk-weighted, increased in October to 396 billion.
What caused the growth of interest income
Interest income of the savings Bank has grown for ten months on 304,4 billion, or 23.7% due to the growth and profitability of corporate loans and growth in loans to individuals.
Net interest income of Sberbank for the first ten months amounted 604,8 billion, a decrease of 15.3% compared to the same period last year. However, the lag of net interest income from volume 2014 continues to decline: for the first half year this index amounted to 22.5%, for the nine months is 16.3%.
Interest expense increased by 414 billion, or 72.7% due to the increase of the level of interest rates in the market and increase the volume of attracted funds. The increase in interest expense continues to decline due to the reduction of the key rate of the Central Bank, indicates the savings Bank.
In addition, since the fourth quarter of 2015, the savings Bank applies the principle of monthly accruals for contributions to the Deposit insurance Fund for a more uniform burden on the financial result, whereas until then these costs had in the last month of the quarter. Bank charges on insurance premiums in Fund of obligatory insurance of deposits in October amounted to 3.1 billion rubles, and if you apply the accrual basis to these funds in the past year, the increase in interest expense for the ten months amounted to 71.9 percent, said the Bank.
Net fee and Commission income of Sberbank grew by 5.7% to 231,5 billion, fee and Commission income not related to lending, grew by 19%. The growth of card transactions remained the main driver of growth in fee income, the Bank specifies.
Net profit of Sberbank in foreign currency revaluation and trading operations on financial markets in ten months amounted to 41.5 billion rubles, compared with 73.1 billion rubles for the same period last year. Operating expenses for the ten months of last year fell by 1.4% due to the ongoing Bank program of cost optimization.
Investments in securities of Sberbank in October increased by 68 billion rubles, or 3.8% through the acquisition of government securities (Eurobonds of the Russian Federation and OFZ) and bonds of companies and banks. The rest of the portfolio on November 1 amounted to 1.8 trillion rubles.
The size of the basic and main capital of the savings Bank are the same in the absence of sources of additional capital and according to the operative data as of November 1 amounted to 1,785 trillion rubles, the total capital — 2,623 trillion rubles. In October major changes in the total capital contributed and earned income revaluation of securities, resulting in total capital of the Bank for October increased by 47 billion rubles.
The capital adequacy ratio of Sberbank’s N1.1 of 1 November amounted of 8.43% with a minimum CBR of 5%, N1.2 — of 8.43% with a minimum value of 6% and N1.0 — 12,34% with a minimum value of 10%.